Consider the following cash flows on two mutually exclusiveprojects for the Bahamas Recreation Corporation (BRC). Bothprojects require an annual return of 16 percent.

  

Year	Deepwater Fishing	New Submarine Ride
0	−$	985,000		−$	1,920,000
1		405,000			970,000
2		538,000			835,000
3		455,000			820,000

  

a-1.	Compute the IRR for both projects. (Do not roundintermediate calculations. Enter your answers as a percent roundedto 2 decimal places, e.g., 32.16.)

  

	IRR
  Deepwater Fishing	% Â
  Submarine Ride	%

  

a-2.	Based on the IRR, which project should you choose?
	   Deepwater Fishing Submarine Ride

  

b-1.	Calculate the incremental IRR for the cash flows. (Donot round intermediate calculations. Enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)

  

  Incremental IRR

%

   

b-2.	Based on the incremental IRR, which project should youchoose?
	   Submarine Ride Deepwater Fishing

   

c-1.	Compute the NPV for both projects. (Do not roundintermediate calculations. Round your answers to 2 decimal places,e.g., 32.16.)

   

	           NPV
  Deepwater Fishing	$  Â
  Submarine Ride	$  Â

  

c-2.	Based on the NPV, which project should you choose?
	   Deepwater Fishing Submarine Ride

  

c-3.	Is the NPV decision consistent with the incremental IRRrule?
	No Yes